Broad-based intangibles as generators of growth in Europe

Hannu Piekkola

Economics of Innovation and New Technology, 2018, vol. 27, issue 4, 377-400

Abstract: This paper analyzes broad performance-based measures of intangibles in European Union countries to find new sources of growth and shows that intangible capital (IC)-driven growth was halted in European industries during the 2008–2013 financial crisis period. Much of this IC, such as purchased organizational, research and development (R&D) and information and communication technology capital, is unaccounted for in systems of national accounts, so that total IC investment is 29.6% of value added, with R&D having the lowest gross domestic product share at 5.0%. On average, deteriorating IC growth has decreased labor productivity by −2.9% annually. Policies fostering multifactor productivity growth have been strongly biased and have ignored the loss of those skills necessary for long-term growth. During 2008–2013, innovation thus failed to compensate for Europe’s dwindling fixed-capital-intensive manufacturing and job losses, but broad-based IC offers a roadmap for recovery by relying on an increasing role for IC-producing services.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:taf:ecinnt:v:27:y:2018:i:4:p:377-400

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DOI: 10.1080/10438599.2017.1376170

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